St. Paul
The federal government’s proposals for changes to the tax system will again be at the center of the economic agenda in 2024. The approval of these agendas next year, however, will depend on the pace of Congress in the municipal election year.
The text of the tax reform approved in 2023 already provides a calendar for sending invoices on three topics. In other words, the deadlines are now set in the Constitution.
According to the constitutional text, the executive power must send to the national Congress a bill dealing with income taxation within 90 days of the promulgation of the reform. This text must address the end of income tax exemption in the distribution of profits and dividends from companies to individuals.
There is also the expectation of a new correction in the IR table.
It was also established that the government will send a payroll tax reform bill by March. The announcement of this proposal, however, was anticipated by Minister Fernando Haddad (Finance), who published a MP (interim measure) which provides for the gradual reimbursement of salaries.
The Executive will still have to send, by mid-June, the bills that will cover in detail the tax reform approved this year, which concerns taxes and contributions on consumption. The idea is to do it by April.
The proposal approved in December makes 74 mentions of the need for a complementary law to regulate the tax system which will begin to come into force in 2026.
Tax reform agenda in 2024
The Executive must transmit to the National Congress:
- Proposal to reform income taxation by March
- Until June, projects regulating the reform of consumption taxation
Source: Federal Constitution.
“The complete functioning of the system will only be known after all these regulations. It was above all in the infra-legal acts, ancillary obligations and interpretations that the current system has become so complex and lacking in coherence”, says the partner at Finocchio & Ustra Lawyers Bruno Marques Santo.
The government has already anticipated that there will be at least three bills. One to regulate the two main taxes created (federal CBS and States and Municipalities IBS) and define their exceptions, one for the IBS Management Committee and the other for the tax on items harmful to health and the environment .
The government is still evaluating the need to present a fourth project to manage the compensation funds.
The President of the Chamber of Deputies, Arthur Lira (PP-AL), indicated that the Chamber will be able to simultaneously examine these texts to approve them before the elections and that regulation will be one of the priorities of the Legislature next year.
In theory, the government has until September 2025 to approve these projects, which would allow the transition to the new system to begin the following year, respecting the ninety and one-year deadlines. But it will still be necessary for infra-legal regulations to be issued by the Revenue Agency, for example, for everything to work within the deadlines set by the Constitution.
As a result, the vote on income tax reform may be postponed for the second time.
Changes that will come into effect in 2024
In 2023, the Ministry of Finance promoted a series of changes to the tax system that will take effect next year.
IOB tax consultancy has listed some of them at the request of Sheet.
On January 1, the law that changes the taxation of investments in investment funds in the country and income received by residents from investments abroad in offshore companies comes into force.
New rules are also starting to come into force that allow companies to reduce tax on profits using mechanisms such as the ICMS state investment subsidy credit. This is the government’s main bet to increase revenue in 2024.
There will also be changes to the JCP (Interest on Equity) rules paid to the company’s shareholders, which will become more restrictive from this year onwards.
Regarding the ICMS, Fernanda Prado Sampaio, coordinator of the tax consultancy area of Finocchio & Ustra Advogados, highlights the forecast of tax operations and self-regularization for companies that in the past have benefited from the tax benefit of the relief, with discounts which can reach 80% of the value of the debts.
According to Sampaio, both in the operation, for debts under administrative or judicial discussion, and in self-regularization (when the tax credit has not yet been released), membership is linked to the condition that the company desists from putting discussion of these charges.
“This is an attempt by the government to take advantage of the delicate moment of uncertainty and try to convince taxpayers to confess and pay debts that in theory they would not pay under normal conditions,” he says.
Some tax changes that will take effect in 2024
- From 1 January, transfers of goods and merchandise in interstate transactions will no longer be taxed and companies will have to observe the procedures set out in the ICMS Agreement 178/2023
- Law no. 14.754/2023 modifies the taxation of investment funds in the country, including exclusive ones, and income earned by natural persons resident in Brazil in financial investments, controlled entities and trusts abroad, starting from January 1
- From 1 January, modification of the tax credit deriving from the state subsidy (ICMS) for the creation or expansion of an economic enterprise
- New transfer pricing rules will come into force on January 1, regarding the determination of the IRPJ/CSLL calculation basis for legal entities domiciled in Brazil that carry out controlled transactions with related parties abroad
- Change to the JCP (Interest on Equity) rules paid to shareholders, which are more limited.
Source: IOB
2024-01-01 13:00:00
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